Gold Reclaims 100-Day Average After CPI Release
Gold prices rose 1.29% to $4,373.70, reclaiming the 100-day moving average despite a 91% probability of a Federal Reserve rate hike.
Gold (XAU/USD) closed the session at $4,373.70, up 1.29% from the open. The metal rebounded from daily lows below $4,300. It successfully reclaimed the 100-day Simple Moving Average at $4,335. This recovery occurred after the release of US inflation data. The data indicated that a Federal Reserve rate hike is nearly certain.
August US Consumer Price Index data showed a 0.4% month-over-month increase. The annual rate stood at 3.4%, matching market expectations. Core CPI rose 0.3%, slightly above the forecast of 0.2%. The one-year core inflation rate remained at 2.4%. These figures aligned with analyst estimates.
Dollar Strength Fades Amid Yield Shifts
The US Dollar Index (DXY) held near 99.00 with a minimal 0.05% decline. The initial currency strength following the CPI release weakened quickly. Money markets priced in a 91% chance of a rate hike at next week's meeting. This high probability was reported by Prime Terminal. The fading dollar reaction provided support for precious metals.
US 10-year Treasury yields dropped 1 basis point to 4.951%. This decline occurred during the trading session. Over the past week, yields had surged more than 16.5 basis points. The recent dip in yields reduced the opportunity cost for holding non-yielding assets. This dynamic favored gold buyers in the immediate term.
Consumer Sentiment Declines as Inflation Fears Rise
The University of Michigan Consumer Sentiment Index for September fell to 47.8. This marked a drop from the previous month's 51.7. The figure missed forecasts of 51.0. Survey director Joanne Hsu cited rising fuel prices and trade tensions. Consumers expect greater pressure on their household budgets. These factors contributed to a pessimistic outlook among US households.
Americans now expect one-year inflation to rise from 4.0% to 4.6%. Five-year inflation expectations increased from 3.3% to 3.4%. This shift indicates growing anxiety about persistent price increases. The data reflects a broader trend of economic uncertainty. It aligns with the hawkish stance implied by the high probability of a rate hike.
Technical Levels Define Near-Term Gold Direction
Gold faces resistance at $4,400, where sellers are currently active. Breaking this level would expose $4,450 and $4,500. The next major barrier is the 200-day SMA at $4,538. The Relative Strength Index remains below its neutral level. This suggests that further selling pressure could cap the metal's advance. Traders are monitoring these levels closely.
Support lies below the 100-day SMA at $4,335. A break below $4,300 is critical for the next move. The September low stands at $4,282. The 50-day SMA provides additional support at $4,269. According to GN auto markets/commodities: gold prices, the market awaits the Fed decision. Fed Chair Kevin Warsh's press conference will be the next major catalyst. The upcoming economic docket includes ADP employment data and retail sales.
